The Conservative Party has indicated its first income tax cut, by saying yesterday that it would review the increase in national insurance contributions announced by the Chancellor last month.

George Osborne, the Shadow Chancellor, stopped short of promising to reverse the £5 billion increase, which is due in April 2011, but said that if his party won the next election he would look at the issue as a priority.

Alistair Darling announced in the Pre-Budget Report that national insurance for employers and employees alike would rise by half a percentage point, which would increase contributions for everyone earning more than £19,500.

The Tories want to go into the next election saying that they would prevent Labour's “tax bombshell” hitting families. Mr Osborne said: “My priority is to try to reverse the increase in national insurance because it is a tax that affects the vast majority of people. It is a tax on jobs at a time of high unemployment. It is a tax on incomes when people will be under severe strain.”

The Tories refused to say how they would fill the £5 billion hole that would be left by such a move. The announcement is also an apparent breach of a pledge made by Mr Osborne in The Times last year when he said that the Tories would not make up-front, unfunded tax cuts.

The Shadow Chancellor's office said that the party would set out how the proposal would be paid for before the next election. It will not, it emphasised, be funded through additional borrowing because it did not regard that as “being paid for”.

Mr Osborne's aides said he decided to focus on the increase in national insurance because it affected low and middle-income workers, and discouraged employers from taking on staff.

The Tories have avoided calling for the abolition of the new 45p top rate of tax, which was also announced in the Pre-Budget Report and which the Government believes will raise £670 million. They are conscious of Labour's desire to paint them as the friends of the wealthy, and believe they have sidestepped a trap laid for them by Gordon Brown.

Mr Osborne also indicated that his party would introduce help for savers and pensioners, groups hit hard by sharp falls in interest rates. The Tories said that the abolition of income tax on savings, at a cost to the Treasury of £2.4 billion, was being considered. The threshold at which pensioners start paying tax could also be lifted.

This idea was unexpectedly endorsed by John McFall, the Labour chairman of the Treasury Select Committee. “I think there is a debate to be had on that issue and to ensure that saving is seen as good and that we can help people as much as we can,” he said. “I would hope that the Government will be looking at this issue over the next few months.”

In an interview with The Sunday Times, Mr Osborne said that Labour's “reckless spending” was turning Britain into the “sick man of Europe”. He promised that, unlike the Government's fiscal stimulus, any Tory tax cuts would be funded through curbs on public spending or increases in other taxes.

Angela Eagle, the Treasury Financial Secretary, accused Mr Osborne of making empty promises. She added: “George Osborne is happy to try to grab headlines with vague talk about tax cuts but as usual he can't say anything about how he would pay for them. The truth is these are just empty promises from the Tories. All that Osborne has confirmed today is that the Conservatives still intend to do nothing to give real help now to families”.

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